The New York Times reported lenders and debt collectors are trying to round up whatever money they can, even if it means forgiving a portion of the borrower’s debts. More collectors than ever before are accepting pennies on the dollars in repayment of outstanding debts.

Don Siler, chief marketing officer at a large collection company working with 7 of the 10 major credit card companies, stated, “You can’t squeeze blood out of turnip. The big settlements just aren’t there.”

Don’t mistake lenders’ good will for charity. They are trying to protect themselves while some people are still ready, willing and able to negotiate some type of account payments. Bank of America has waived late fees and lowered interest rates. American Express and Chase Card Services are expected to do the same.

Debt collectors are currently forgiving anywhere from 20 percent to 70 percent of a person’s total credit card debt. After many instances of collection abuse during a recession, debt collectors are taking a different approach by attempting to negotiate outstanding debts amicably.

So what does this mean for you? Debt collectors are more amenable to making deals so it’s a great time to get your finances in order for the new year. Instead of trying to avoid endless telephone calls and letters from debt collectors, face your debts head-on.

• tally your outstanding debt by making a list of all your creditors with account numbers and addresses;
• review your assets including income, bank accounts, home and vehicles to figure out your worth;
• request copies of your free credit report from the three major credit reporting agencies (Equifax, Experian and Transunion) to find possible credit report errors – if you are a victim of identity theft and the debt does not belong to you, no repayment deal is a good one; and
• discuss your finances with a professional attorney who can advise you of the best steps to take to negotiate your bills.

From negotiating bill settlements to claiming Chapter 13 bankruptcy, a professional attorney can help you do what it takes to become financially free for the new year.

Newsday recently published a valuable article about dealing with debt collectors and resolving unpaid bills. They offer several useful suggestions about handling debt collection including:

Don’t hide from collection calls and letters. Debt collectors don’t go away. If they cannot reach you at home, they may start to contact your family and employers. Before unresolved debts turn into an embarrassing situation, answer the phone and tell debt collectors the truth about your situation.

Don’t pay more than you owe. Never pay inflated dates with extra service charges. Let debt collectors know you won’t pay more than you actually owe.

Don’t pay dead or dormant debt. Old debts may not even belong to you. Debt collection agencies purchase zombie debts and attempt to collect them from the apparent debtor. The debt may belong to someone else with the same name or address. Get your free credit reports from Experian, Equifax and Transunion to review them for possible inaccuracies. Never admit to a debt that isn’t yours or you may wind up paying it anyway.

Don’t stop communicating with collectors. Cutting off communication could encourage creditors to take more drastic actions to collect the money.

Don’t use all your savings or home equity to pay off debt. You will be left with no resources if an emergency arises.

Negotiate the terms. With so many people unable to pay their bills, collectors are willing to accept pennies on the dollar in repayment of outstanding debts. Take advantage of this tough economic times to negotiate a deal with creditors.

Memorialize your conversation. Write the date, time and nature of every conversation with each creditor. Make sure to get the employee’s name or employee identification number so you can reference the conversations accurately in the future.

Never accept abusive collection calls. Collection agents cannot call you continually or in the middle of the night. It is also debt collection abuse to unreasonably threaten you or use profanity during a conversation.

If you are facing debt collection and collection abuse, contact a professional attorney to discuss your options. You will be pleasantly surprised to find out there are many ways to attain financial freedom. A professional attorney will help you identify credit reporting errors, renegotiate debt and eliminate collection abuse.

Mistakes happen, of course.  So the consumers told Cavalry that they had the wrong people and to stop calling.

Unfortunately, Cavalry did not conduct an investigation of the claim of misidentification or the dispute and continued to assert that a debt was legitimate and continued to contact various alleged debtors without conducting such investigation.

The Arizona Department of Financial Institutions filed a Cease and Desist Order against Cavalry in September 2008.  And finally playing it smart and deciding that it was best to avoid losing their license to do business in Arizona, Cavalry took its lumps.

The Arizona Department of Financial Institutions ordered that Cavalry immediately stop the violations of the Arizona law . . . and immediately pay to the Department a civil money penalty in the amount of fifteen thousand dollars ($15,000.00).

Good work, Arizona!

The Order can be found here.

Not so.  In fact, collection activities often start up when the debt is charged off.

My colleagues over at the Alabama Consumer Law Blog have this post titled Can A Debt Collector Call Me About A “Charged Off” Account?

Take some time to read it - there is some excellent information there!

Everyone is looking for greater financial independence in 2009.  Now, new rules have been approved to help you make this a reality.

On December 18, 2008 the Office of Thrift Supervision approved new rules to put restrictions on credit card companies. The rules will help prohibit unfair credit card practices.

According to the rules, lenders cannot raise interest rates charged on credit card balances in the absence of a default - the so-called “universal default” problem. Credit card companies can still raise interest rates for advances and future credit card purchases.

Lenders can no longer allocate all your payments to balances with low interest rates so higher interest rates are charged on outstanding balances. Finally, lenders must give you 45 days notice of changes to the terms of your account rather than the current 15 day notice required by law.

These new rules will come into effect in July 2010 - too late to help you with a debt-free 2009.

So what can you do to get rid of debt and find a financial comfort zone in 2009?

• Review your credit reports from the three major credit reporting agencies. You are entitled to a free report once a year and do not have to join any special services to get it. Review the credit reports carefully to make sure all debts listed are valid and belong to you. Identity theft is a growing problem and quick perusal of your credit reports can help stop trouble in its tracks.

• Avoid getting into more debt in 2009. Even if you simply make minimum payments due on all your credit cards and don’t charge anything else, you are getting ahead slowly.

• Face debt collection head-on. Tally your outstanding bills and figure out your income. Know where you stand.

• If you’re in over your head, talk to a lawyer. There are solutions that will give you new hope for the future.

With a little energy and ambition, you can get rid of stressful bill problems in 2009.

The Buffalo News reported that Elite Recovery Services closed its doors because the cost of operations for Elite exceeded profits. The company was both a debt buyer and a collection agency. Elite CEO Richard Corica stated the company did not file for bankruptcy.

When Elite closed for business on Thursday, it left 73 people unemployed for the new year. Another collection agency in Buffalo, First American Recovery Service, filed for Chapter 11 bankruptcy just a month ago.

Debt collection agencies claim they have difficulty collecting from consumers, which is why they say they can’t pay their own bills. Often these debt collection agencies are also debt buyers. This means they purchase outstanding unsecured debts such as credit cards then try to collect on them.

The problem with this type of debt collection is the possibility for identity theft. Collection agencies are here today and gone tomorrow. Employees who had access to confidential information are suddenly out of work. Collection abuse may occur.

Debtors may be confronted by improperly trained collection agents or frustrated collectors trying to protect their jobs. Collection agents cannot threaten you, harass you, curse at you or call at odd hours of the day. These are all acts of collection abuse which should not be tolerated.

Further, always make sure debts belong to you. Collection agents may be trying to collect a debt that belongs to someone else with your name or address. Verify all debts in writing and insist on having proof before you assume a debt belongs to you. Review your credit report to find inaccuracies and dispute them.

If you are facing debt collection and collection abuse, you are not alone. You have rights and deserve to be treated fairly. Consult with a collection abuse lawyer to find out your options. Don’t let transient debt collectors jeopardize your financial freedom.

Fitch Managing Director Mike Dean states, “Rising delinquencies will pressure care issuers and their retailer partners during the coming year as Fitch expects a scenario akin to nearly one in eight cardholders defaulting on their store cards.”

Because of all the charge-offs, retail card trusts need to make up the loss. To offset the charge-offs retail cards are typically charging cardholders higher annual percentage rates (APRs). Retailers tracked by the index include Sears, Walmart, J.C. Penney, Dillard’s, Walmart, Lane Bryant, The Limited Stores, Federated, Best Buy and Loews.

Retail credit cards traditionally charge higher interest rates than other credit cards. With this financial forecast, interest rates and debt collection efforts will step up. Collectors will be encouraged to aggressively pursue debtors which may even lead to collection abuse.

Collectors cannot threaten or harass debtors or call them in the middle of the night. Excessive fees cannot be charged to delinquent debtors. Just because you’ve fallen behind on your bills doesn’t mean you don’t have rights.

Don’t let debt collection and collection abuse become a nagging problem. Contact an experienced consumer rights lawyer to find out about your rights and financial options to get on the road to financial independence.

The Washington Post reported the Federal Reserve will be voting about credit card industry reforms on Thursday. The proposed changes would represent the largest overhaul of the credit industry in decades according to consumer advocates and banking officials.

Edward Yingling, chief executive of the American Bankers Association, stated, “It covers a lot of issues and is really unprecedented in its scope. You add them all up, it’s going to mark the beginning of a new market.”

An increasing number of people are facing debt collection these proposed changes are critical during a time of serious economic recession. Originally, the reform was simply intended to force the industry to make disclosures of terms and conditions more understandable to everyday consumers.

Now the reforms include a proposal regarding “unfair and deceptive practices”. Possible reforms include:

• ban on raising existing balances and interest rates unless customer is 30 days late or more in making a minimum payment; and

• dictate how credit card companies should apply payments exceeding the minimum due so debts with the highest interest rates don’t linger the longest to cost the consumer more.

Travis Plunkett, legislative director for the Consumer Federation of America, says, “They can cut my credit line, they can freeze my credit line, they can tell me going forward that my interest rate is doubled or triple.”

The banks are opposing the changes and asking for a year or more to implement them. Meanwhile, consumer advocates are pushing them as debt collection increases for many Americans. While reforms are helpful, they will not fix everything.

Ira Rheingold, executive director of the National Association of Consumer Advocates, comments, “I think we’d be kidding ourselves if we thought this is the final word on credit cards. This is a good first step. But there’s a way to go before we properly regulate credit in our society.”

The bottom line is you can’t wait for the government to resolve your debt collection problems. If you phone is already ringing constantly and you face collection abuse when you pick it up, you need to take control of your finances now.

Talk to an experienced consumer protection lawyer to find out your financial options. When you consult with an educated professional, you can find ways to fix your financial picture for a brighter economic future – without waiting for Federal decisions.

CNN Money reported on the recent flow of funds report compiled by the Federal Reserve. Household debt fell $30 billion. At the same time, Americans’ net worth plummeted by the largest amount in the past 50 years.

One of the reasons debt fell is over a million Americans surrendered their homes to foreclosure since August, 2007. Credit is more difficult to obtain when people are already facing debt collection on other bills. With all the defaults, it is also more expensive to get credit.

Because so many Americans are already dealing with unpaid bills and debt collection, they can’t afford to finance major purchases such as cars and homes. Jobs are lost, corporations are seeking the shelter of bankruptcy and the overall economy continues to suffer.

Former Federal Governor Lyle Gramley commented, “Consumers are going through a major change in their spending and savings habits. Throughout the housing bubble, consumers had a savings rate of zero, relying on the rising price of their homes. Now they’re saving money for the future instead of spending it.”

If you are facing debt collection, it’s time to make a change. Don’t wait until your telephone is ringing all day and your mailbox is stuffed with collection letters. Deal with debt collectors head-on. Talk frankly about your financial circumstances rather than ignoring the problem.

Debt collectors cannot threaten you, coerce you, charge unauthorized fees or call at odd hours. Owing money does not mean you don’t have rights. Feel confident to approach debt collectors without dealing with collection abuse.

Take control of your finances and start pulling back with the rest of America. Review your current outstanding debts and earnings. Discuss your options with a professional attorney to get a clear picture of your financial future.

The current financial state of the nation has brought many big businesses to their knees. Companies have gone from prosperity to bailouts, profits to bankruptcy. On Monday the Chicago Tribune reported the world famous Tribune company filed for Chapter 11 bankruptcy.

By filing for bankruptcy, the Tribune was looking for essential protection from debt collection. Chairman of the Tribune Sam Zell referred to the forces against the media industry and economy as a “perfect storm”. With diminished advertising revenue, the Tribune sought the shelter of bankruptcy.

Zell states, “This filing is all about relieving the pressure on the company from too much debt. This is a great challenge. It’s a great opportunity. The chief operating officer in charge of debt will be yours truly.” He hopes the company will come out of the Chapter 11 process stronger.

When the company realized their dangerous level of debt in a falling economy, they started to cut costs. The company is still earning revenue to payoff their debts. The Tribune has 180 to develop a plan the bankruptcy court will deem acceptable.

Much like the Tribune, each individual has their moment of reckoning during a difficult economy. Their first step was to find ways to increase revenues and cut expenses. This useful advice is beneficial to people, too.

If you are facing debt collection and your telephone is ringing constantly, it’s time to review your expenses and income. Start by tallying your monthly bills versus your monthly income. Finish by totaling your outstanding bills versus your annual income last year.

Make payment arrangements with your creditors and stick to them. Creditors who threaten you or demand something you cannot deliver might be committing collection abuse. Collection agents are not allowed to curse, threaten or call constantly to demand payment and you have legal rights.

When you finances start to spiral out of control, call an experienced consumer protection lawyer to discuss your options. Don’t let debt collection and collection abuse take over your life. Get the help you need to get back your personal and financial freedom sooner than you think.